Not so long ago, kidnappers demanded hard cash as ransom. Since other forms of payment were traceable, criminals preferred liquid cash due to its difficulty in tracing. However, with the introduction of cryptocurrency, their problem seemed to have been solved. Now, in many countries, there is a so-called rise in crypto kidnappers, who demand ransom in Bitcoins instead of cash.
Cryptocurrencies like Bitcoin have gained popularity amongst criminals as they are portrayed as an untraceable currency that can be converted into cash from anywhere in the world. While cryptos are not completely untraceable, it is definitely difficult to track. The other potential advantage is unlike conventional currencies, authorities find it difficult to seize cryptocurrencies. Hence, even if a criminal is caught in the act, if their Bitcoin wallet and hard drives were not seized, they could still access the amount later.
"Bitcoin is money that cannot be seized, unlike cash, by authorities. If the same money was in a bank account, it could be frozen, but you can only access the Bitcoin once the owner gives you a password," Sidharth Sogani, a blockchain researcher told VICE World News.
Rise of Illicit Dealings in Crypto
Considering the advantages, in many countries, criminals have resorted to Bitcoins or other cryptocurrencies, especially after its first boom in 2017. In the U.S., a huge amount of transactions related to drug trafficking has shifted to virtual currencies as authorities continue to seize millions of dollars in cash. While such large drug operations can still overcome those, it is difficult for small-time kidnappers. Hence, there is an upward trend in moving to cryptocurrency.
In the U.K., last year, the Scotland Yard faced difficulties in nabbing kidnappers who demanded Bitcoins. In September 2018, an American businessman William Sean Creighton was kidnapped in Costa Rica. The kidnappers demanded $5 million in Bitcoins but the family was only able to pay $1 million and his body was later found in an unmarked grave. The first widely reported case was also in Costa Rica. Kidnappers demanded $500,000 ransom in Bitcoins for a Canadian businessman in 2015.
While crypto-kidnapping was mainly becoming a widespread problem in the west, soon countries like South Africa and India began reporting such cases. Since 2018, dozens of countries have reported cases of crypto-kidnapping. For a country like India where cryptocurrency enthusiasm is a niche and growing at a slow pace, there has been an upward trend in crypto-kidnapping.
Recently, in the Indian state of Karnataka, an eight-year-old boy of a renowned businessman was abducted and the kidnappers demanded $2.3 million in Bitcoins (100 BTC). However, the police nabbed the criminals without needing to pay the amount.
"The fact that cryptocurrencies are unregulated and that law-enforcement agencies cannot easily monitor transactions, identify wallet holders or freeze crypto-wallets in the way they can freeze other assets is very attractive to kidnappers," Control Risks, a global consulting firm said in a report.
What Does the Future Hold?
Demanding cryptocurrencies as ransom has mainly been associated with hacking. Almost all the countries have had cases where hackers encrypted computer or network and demanded Bitcoins in exchange for the decryption key. However, as prices of cryptocurrencies crashed, the number of crimes related to it also decreased. But as the world is seeing a crypto boom once again, many such crimes are on the rise. In the last few months, the value of the cryptocurrency has increased by at least 44 percent and so has crypto crimes.
The other problem is crypto literacy. Crypto-ransoms are on the rise in countries where the literacy of cryptocurrency remains low. Governments in those countries have tried banning cryptocurrencies altogether instead of raising awareness, helping the crimes grow.
"The unregulated and perceived anonymous nature of cryptocurrencies continues to attract the attention of organized criminal groups, particularly those involved in drug trafficking and money laundering. However, it has yet to fully permeate the kidnap-for-ransom world," Control Risks' report said.